Over 90,000 Ethereum-based projects were likely involved in pump-and-dumps schemes, damaging the industry’s reputation amid liquidity pulls.
The cryptocurrency space has been compared to the Wild West numerous times, and while it has been maturing to resemble the world of traditional finance more closely, in the decentralized finance (DeFi) space, the “wild” ethos remains, with freewheeling trading activity often leading to pump-and-dump schemes and wash trading.
Pump-and-dump schemes usually consist of an actor or group of actors manipulating investors with false claims, excitement and fear of missing out to make them buy tokens while they covertly dump their own stakes at higher prices.
According to some estimates, over two million cryptocurrencies have been launched so far, most of which have been abandoned. On the Ethereum network alone, according to a recent Chainalysis study, over 370,000 tokens were launched in 2023, with 168,600 listed on decentralized exchanges (DEXs).
